LEASE AGREEMENT Between WYCO DEVELOPMENT LLC and COLORADO INTERSTATE GAS COMPANY Effective Date: November 1, 2008
EXHIBIT
10.A
Between
WYCO
DEVELOPMENT LLC
and
INDEX
|
Page
|
ARTICLE I -
LEASE AGREEMENT
|
1
|
ARTICLE II -
TERM
|
1
|
ARTICLE III -
TERMINATION
|
2
|
ARTICLE IV -
OPERATION AND MAINTENANCE OF FACILITIES
|
2
|
4.1 Operation
and Maintenance by CIG
|
2
|
4.2 Compliance with Codes and Regulations |
3
|
4.3 Environmental Policy |
3
|
4.4 Right of Ingress and Egress by WYCO |
3
|
ARTICLE V –
LEASE PAYMENT
|
4
|
5.1 Lease Payment Computation |
4
|
5.2 Payment Date |
5
|
5.3 Re-Determination of Base Lease Payments |
5
|
ARTICLE VI -
ADVANCE OF DEFERRED TAXES
|
5
|
ARTICLE VII - WYCO’S UNDERTAKINGS |
5
|
ARTICLE VIII - AD VALOREM TAXES, SALES/USE TAXES AND OPERATIONS |
6
|
8.1 Filing
of Returns and Payment of Taxes as Additional
Rent
|
6
|
8.2 Proration
of Taxes at Termination
|
6
|
8.3 Proof
of Payment
|
6
|
8.4 Protest
of Taxes by CIG
|
6
|
8.5 Installment Tax Payments |
6
|
8.6 Cooperation Regarding Tax Protests |
7
|
8.7 Deduction
by WYCO
|
7
|
|
|
ARTICLE IX -
INSURANCE
|
7
|
9.1 Required
Insurance Coverage
|
7
|
9.2 Copies
of Insurance Policies
|
7
|
ARTICLE X -
INDEMNIFICATION
|
8
|
i
ARTICLE XI -
DEFAULT
|
8
|
11.1 Default Defined |
8
|
11.2 Remedies |
8
|
ARTICLE XII –
FORCE MAJEURE
|
9
|
12.1 Force Majeure Defined |
9
|
12.2 Effect of Force Majeure |
9
|
12.3 Limitations |
9
|
ARTICLE XIII
- DISPUTE RESOLUTION
|
10
|
13.1 Mediation of Disputes and Disagreements |
10
|
13.2 Binding Arbitration |
10
|
13.3 General Principles |
10
|
ARTICLE XIV -
MISCELLANEOUS
|
10
|
14.1 Assignment |
10
|
14.2 Notices
|
11
|
14.3 Additional Documents |
11
|
14.4 Applicable Law |
11
|
14.5 Regulation
|
11
|
14.6 Amendments
and Modifications
|
11
|
14.7 Severability
|
11
|
14.8 Section
Headings
|
11
|
14.9 Counterparts Execution |
12
|
EXHIBIT A -
Description of Facilities
|
|
EXHIBIT
B - 1 Base Lease Payment Computation for Pipeline
Facilities
|
|
EXHIBIT B - 2
Base Lease Payment Computation for Storage Facilities
|
|
EXHIBIT C - Illustrative Calculation of Advance for Deferred Taxes |
ii
THIS
LEASE AGREEMENT (“Lease
Agreement”), is made effective as of the 1st day of November, 2008, by
and between WYCO
DEVELOPMENT LLC, a Colorado limited liability company (“WYCO”), and COLORADO
INTERSTATE GAS COMPANY, a Delaware corporation (“CIG”). WYCO
and CIG may each be referred to herein individually as a “Party” or,
collectively, as the “Parties”.
W
I T N E S S E T H
WHEREAS,
WYCO has contracted for the construction of approximately 164 miles
of new 24" and 30" O.D. new interstate natural gas facilities on CIG’s
interstate system. (the “Pipeline Facilities”) and a new underground natural gas
storage facility in Xxxxx County, Colorado (the “Storage Facilities”), (the
Pipeline Facilities and the Storage Facilities are collectively referred to
hereinafter as the “Facilities”) all as further described in Exhibit A attached
hereto and incorporated herein by reference, including any items required
pursuant to the Order of the Federal Energy Regulatory Commission authorizing
the construction of the Pipeline Facilities issued on March 21, 2008 in Docket
No. CP07-207-000 and the Order authorizing the construction of the Storage
Facilities issued on April 30, 2008 in Docket No. CP08-30-000;
and
WHEREAS,
upon the completion of the construction of the Facilities WYCO desires to lease
the Facilities to CIG; and
WHEREAS,
CIG desires to lease the Facilities from WYCO;
NOW
THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the Parties hereto agree as
follows:
ARTICLE
I
Effective upon the
date any portion of the Facilities are capable of being placed into service,
WYCO shall lease that portion of the Facilities to CIG and CIG shall lease that
portion of the Facilities from WYCO.
ARTICLE
II
TERM
The term of this
Lease Agreement shall commence on the date that the first portion of the
Facilities are capable of being placed into service and shall end on the date
that is thirty (30) years from the date on which the Storage Facilities are
placed into service (the “Initial Lease Term”) unless this Lease Agreement shall
be earlier terminated as provided herein.
ARTICLE
III
TERMINATION
3.1 This
Lease Agreement may be terminated with regard to all or any part of the
Facilities without liability of any kind upon the written notice from either
Party to the other Party that either (i) WYCO has not affirmatively elected to
proceed with construction of the Facilities following receipt of FERC
certification, or (ii) the conditions to effectiveness of the Precedent
Agreement (or Firm Service Agreement) between CIG and Public Service Company of
Colorado for services on the applicable portion of the Facilities have not been
met and such Precedent or Firm Service Agreement has been terminated on the
basis thereof.
3.2 At
the expiration of the Initial Lease Term, and at the expiration of any Extension
Lease Term (as such term is defined herein), or upon any early termination of
the Lease Agreement as provided for herein other than (i) pursuant to Section
3.1 or (ii) in the event of a default by CIG hereunder, this Lease Agreement
shall automatically renew to be coterminous with the term (as the same may be
extended) of the Firm Service Agreement referenced in Section 3.1
above. If such Firm Service Agreement is not then in effect or is not
renewed, then CIG shall within nine (9) months prior to (x) the expiration of
the Initial Lease or any Extension Lease term, or (y) the early termination of
the Lease Agreement as provided above, send written notice to WYCO of its
election to either:
(a) Renew
the Lease Agreement for an additional period of time to be mutually agreed upon
by the Parties (the “Extension Lease Term”) on such terms and conditions as are
contained in this Lease Agreement; or
(b) Purchase
the Facilities (as defined in this Lease Agreement) at a price that has been
mutually agreed upon by CIG and WYCO. If a price cannot be agreed
upon within sixty (60) days of CIG’s notice of its election to purchase the
Facilities, then WYCO, or an affiliate of WYCO that will own the Facilities,
shall file any necessary application with the FERC, pursuant to section 7(c) of
the Natural Gas Act, to enable it to provide jurisdictional services using the
Facilities and CIG will file an application with the FERC, pursuant to section
7(b) of the Natural Gas Act, to enable it to abandon the Facilities and all
services provided using said Facilities. CIG will remain the operator
of the facilities until abandonment is completed.
ARTICLE
IV
OPERATION
AND MAINTENANCE OF FACILITIES
4.1 Operation
and Maintenance by CIG. CIG shall have complete operational
control over the Facilities and shall operate, preserve, and maintain the
Facilities so as to achieve a high level of availability and in accordance with
prudent and accepted industry standards and in a state of good working order,
ordinary wear and tear excepted, consistent with and not less than those
practices adopted by CIG for the preservation of its own gas pipeline
facilities. CIG shall also be responsible for all administrative
activities and expenses related to the operation and maintenance (whether
routine, scheduled, or unscheduled) of the Facilities other than those
responsibilities of WYCO as expressly described in this
Agreement. All costs of operating and maintaining the Facilities,
including the cost of conducting an ongoing pipeline integrity program, shall be
borne by CIG unless such costs can be characterized as capital expenditures, in
which case the reasonable cost thereof shall be borne by WYCO, and treated as
additional rate base for purposes of computing the Lease Payments pursuant to
Section 5.1.
4.2 Compliance
With Codes And Regulations. During the Initial Lease Term and
any Extension Lease Term, CIG shall be solely responsible for complying with all
applicable laws, codes and regulations promulgated by any government or
regulatory authority having jurisdiction over CIG or the Facilities, and shall
indemnify WYCO for any loss, cost or expense (including attorneys’ fees) in
connection with any breach or alleged breach of the foregoing
obligation. CIG shall further be required to receive and respond to
all inquiries by any regulatory authorities, and shall promptly provide WYCO
with copies of all such inquiries and the responses thereto.
4.3 Environmental
Policy. CIG shall comply with its Environmental Compliance
Policy in the operation and maintenance of the Facilities. CIG’s Environmental
Compliance Program shall be maintained and applied to effectively prevent
environmental violations and prepare CIG to deal with violations if they happen,
and shall include:
(a) An
Environmental Compliance Policy which shall be prepared by CIG, and which shall
be subject to WYCO’s reasonable approval, which shall be distributed to all
employees, agents, contractors, or representatives involved in the operation or
maintenance of the Facilities.
(b) An
Environmental Compliance Video which shall be shown to all employees involved in
the operation of the Facilities.
(c) Implementation
of the policies and procedures in CIG’s Environmental Compliance
Manual.
(d) Environmental
Compliance Training of all of the employees involved in the operation of the
Facilities.
(e) An
Environmental Auditing Program to audit for environmental compliance and to
correct any problems discovered during the audits as necessary to maintain
environmental compliance.
(f) An
Environmental Crisis Management Team to deal with any environmental violations
that arise on a priority response basis.
(g) A
Personal Accountability Program which documents breaches of the Environmental
Compliance Program and CIG’s response to the infractions, including employee
discipline.
(h) An
environmental HOTLINE which allows CIG’s employees to anonymously report
environmental concerns.
(i) The
appointment by CIG of Responsible Corporate Officers for environmental
compliance. The Responsible Corporate Officers shall implement and
comply with the Environmental Compliance Program in the operation of the
Facilities. CIG shall provide an annual update of Environmental
Compliance to WYCO.
4.4 Right
Of Ingress And Egress By WYCO. WYCO shall have a right of
ingress and egress to the Facilities upon giving CIG's designated representative
twenty-four (24) hours prior notice at reasonable hours and for reasonable
periods for the purpose of inspecting the Facilities or showing the Facilities
to prospective purchasers, lenders or investors, provided that WYCO shall not
interfere with or impair CIG's operation of the Facilities.
ARTICLE
V
LEASE
PAYMENTS
5.1 Lease
Payment Computation. CIG, with WYCO's approval, will compute
the lease payments for the Facilities. CIG will provide WYCO with all
details necessary to support the rent computation. WYCO shall have
the opportunity, upon ten (10) days’ prior written notice, at its own cost and
during normal business hours, to examine or have a third party audit the books
and records of CIG in respect of any items relevant to the computations under
this Article 5.
(a) Base
Lease Payment Computation. The Base Lease Payment shall be
computed as of the in-service date of the Facilities (or any portion thereof
effective upon the date that portion of the Facilities is placed in service)
using the applicable formula described in Exhibit B attached hereto and
incorporated by reference (“Base Lease Payment Computation”). The
initial Base Lease Payment Computation shall occur in the month of January,
2009.
(b) Base
Lease Payment Adjustment. Commencing in the second calendar
quarter of the Initial Lease Term, the Base Lease Payment shall be adjusted,
upward or downward, by the difference between the actual revenues collected by
CIG in the prior quarter for services provided on the Facilities (excluding any
revenues that CIG is required to credit or refund to shippers, or are reflected
in the calculation of recourse rates, or which CIG is required to pay to any
other entity), and the amount of revenues determined to be necessary for CIG to
fully recover the cost of service of the Facilities, as determined in the most
recent prior determination of the recourse rates applicable to the Facilities;
provided, that promptly following occurrence of an event that gives rise to a
credit or refund to shippers or calculation or payment as contemplated herein,
CIG shall report to WYCO on the causes underlying such occurrence and the steps
being taken to prevent the recurrence of such events in the future.
(c) Base
Lease Payment Components. The computation for the Base Lease
Payment will include the following components: (1) depreciation expense, (2)
rate of return on rate base, and (3) income tax factors as authorized by the
Federal Energy Regulatory Commission for recovery by CIG in the recourse rates
applicable to the facilities.
Any disagreement
between the Parties with respect to computation of the Base Lease Payment or any
adjustment thereto shall be resolved in accordance with the provisions of
Article 13.
5.2 Payment
Date. Other than the initial Lease Payment, which shall be
made in February of 2009, and which shall cover the period from the In-Service
Date of the first Facilities that are covered by this Lease Agreement through
the end of January, 2009, Lease Payments will be due and payable on or before
the tenth (10th)
day of the month following the calendar month to which such payment is
applicable. Late payments hereunder shall accrue interest from the
due date to the date of payment at a rate determined pursuant to Section
154.501(d) of the Code of Federal Regulations.
5.3 Re-Determination
of Base Lease Payments. The Base Lease Payment shall be
re-determined on the effective date of any additional Facilities being placed
into service and covered by this Lease, as well as annually effective on or
before April 1st
of each year using the applicable formula described in Exhibit B to reflect
changes in the Rate Base (as such term is defined in Exhibit B) effective as of
December 31st
of the prior year. The Base Lease Payment shall also be adjusted on
each occasion when the recourse rates applicable to the Facilities are
revised.
ARTICLE
VI
ADVANCE
OF DEFERRED TAXES
Effective on April
1st
of the year following the commencement of the Lease Agreement, and on each April
1st
thereafter for as long as there remains a difference between the tax basis of
the Facilities and the book value of the Facilities reflected in the rate base,
an interest free advance of funds shall be made between CIG and WYCO to reflect
income tax timing differences associated with the use of straight-line (book
value) and accelerated (tax basis) tax depreciation of the Facilities by CIG
(the “DIT Advance”). Such benefit shall be determined using the tax
rates as reflected in CIG's currently effective jurisdictional rates multiplied
by the difference between (i) the tax depreciation expense available to CIG by
using the fifteen (15) year MACRS formula for the prior year, and (ii) the
depreciation expense for the prior year that was used in the calculation of the
Base Lease Payment (the “DIT Amount”). In a year during which the DIT
Amount is positive, such amount shall be advanced by CIG to WYCO and shall
create or add to the balance of the DIT Advance. In a year during
which the DIT Amount is negative, such amount shall be paid by WYCO to CIG and
shall reduce the balance of the DIT Advance. At the termination of
this Lease Agreement, WYCO shall return to CIG the remaining balance (if any) of
the DIT Advance. An illustrative calculation of the amounts of the
advances is shown on Exhibit C.
ARTICLE
VII
WYCO’S
UNDERTAKINGS
(a) WYCO
hereby covenants that, if CIG shall perform all the obligations required to be
performed by CIG under this Lease Agreement and subject to WYCO’s rights and
obligations with respect to any real estate rights, CIG shall have and enjoy the
quiet and peaceable possession and use of the Facilities during the term of this
Lease Agreement from and against anyone claiming by, through or under
WYCO.
(b) WYCO
shall preserve and maintain, throughout the term of the Lease, all of its
property rights in the Facilities and shall not unreasonably impede CIG’s right
to the continued use of the Facilities in the operation of its pipeline
system. The foregoing sentence shall not be construed to restrict
WYCO’s ability to transfer the Facilities in their entirety to a third party, to
encumber the Facilities with financing in WYCO’s sole discretion, or to
substitute portions of the Facilities with replacement facilities if such
replacement facilities are generally comparable to the portion of the Facilities
being so replaced.
ARTICLE
VIII
AD
VALOREM TAXES, SALES/USE TAXES AND OPERATIONS
8.1 Filing
of Returns and Payment of Taxes. CIG, on behalf of WYCO, shall
timely file all Ad Valorem tax returns and render and pay (prior to delinquency)
all Ad Valorem taxes presently and hereafter enacted which are lawful
obligations of WYCO for the Facilities, unless instructed otherwise by
WYCO. Such tax payments shall be considered as additional
rent. Unless otherwise agreed to by the Parties in writing, CIG shall
be responsible for the payment of any sales/use taxes determined to be due on
the Lease Payments hereunder.
8.2 Proration
of Taxes at Termination. CIG shall pay all of the Ad Valorem
taxes levied on the Facilities related to the first partial calendar
year and CIG shall pay a pro rata share (based on the number of days CIG leased
the Facilities in the calendar year) of the last calendar year prior to the
termination of this Lease Agreement.
8.3 Proof
of Payment. CIG shall timely furnish to WYCO receipts of the
appropriate taxing authority or other proof satisfactory to WYCO evidencing
payment. CIG shall timely furnish to WYCO a copy of all property tax
assessments, returns and bills for the Facilities.
8.4 Protest
of Taxes by CIG. If CIG deems any tax relating to the
Facilities excessive or illegal, CIG may defer payment thereof so long as the
validity or the amount thereof is contested by CIG with diligence and in good
faith. If at any time payment of the contested tax shall become
necessary to prevent the delivery of a tax deed conveying the Facilities or any
portion thereof because of nonpayment or other adverse impact upon the
Facilities (i.e. imposition of a tax lien), CIG shall pay the contested tax, and
any interest or penalties due thereon, in sufficient time to prevent the
delivery of any tax deed or other adverse impact.
8.5 Installment
Tax Payments. If by law any Ad Valorem tax or special
assessment with respect to the Facilities is payable, or, at the option of the
taxpayer, may be paid in installments, CIG may, whether or not interest shall
accrue on the unpaid balance thereof, pay the same and any accrued interest or
any unpaid balance thereof in installments as each installment becomes due and
payable, but in any event before any fine, penalty, interest or cost may be
added thereto for nonpayment of any installment or interest.
8.6 Cooperation
Regarding Tax Protests. Any contest as to the validity or
amount of any Ad Valorem tax or special assessment for Facilities may be made by
CIG in the name of WYCO or CIG, or both, as CIG shall determine, and WYCO agrees
that it will, at CIG’s expense, cooperate with CIG in any such contest to such
extent as CIG may reasonably request. It is understood, however, that
WYCO shall not be subject to any liability for the payment of any costs or
expenses in connection with any proceeding brought by CIG, and CIG covenants to
pay and to indemnify and save harmless WYCO from any such costs or
expenses. CIG shall be entitled to any refund of any Ad Valorem tax
or special assessment and penalties or interest thereon which has been paid by
CIG to the taxing authority or to WYCO.
8.7 Deduction
by WYCO. WYCO shall be able to continue to deduct, for income
tax purposes, all real estate taxes, personal property taxes and special
assessments on an assessment date basis. CIG agrees to provide WYCO
with such additional information as WYCO may reasonably request to assist WYCO
in maintaining WYCO's tax deduction for these taxes on an assessment date
basis.
ARTICLE
IX
INSURANCE
9.1 Required
Insurance Coverage. To protect WYCO and CIG against liability
for damage, loss or expense arising in any way from damage to the Facilities, or
from injury or death of any person or persons, including employees of CIG,
arising as the result of, or in connection with or caused by CIG's operation of
the Facilities, CIG shall maintain during the Initial Lease Term and any
Extension Lease Term, insurance coverages in accordance with prudent industry
practices for similar facilities and in accordance with CIG practices on its own
pipeline and storage facilities, such coverage levels to be notified to and
approved by WYCO prior to the effective date of this Lease
Agreement. Such policies shall be procured at CIG’s own expense and
with reliable insurance companies, or, at CIG’s option, CIG may self-insure a
portion of the Facilities, in such amounts and on such terms as notified to and
approved by WYCO from time to time. Any insurance policies acquired
by CIG on the Facilities shall name WYCO as an additional insured without
limitation.
9.2 Copies
of Insurance Certificates. CIG shall, upon request, promptly
furnish WYCO with copies of all insurance certificates evidencing coverage on
the Facilities. CIG shall also, upon request, promptly provide WYCO
with proof of payment for such insurance coverages. Such evidence of
insurance shall be provided at least thirty (30) days prior to the expiration of
any policy which such insurance is replacing or renewing, and each such policy
shall provide that it is non-cancelable for any reason including non-payment of
premiums without at least thirty (30) days prior written notice to
WYCO. CIG shall notify and secure approval from WYCO of any changes
in insurance coverage levels from those approved pursuant to Section 9.1
above.
ARTICLE
X
INDEMNIFICATION
CIG agrees to
protect, defend, indemnify and hold WYCO and WYCO’s officers, directors,
members, shareholders, agents, servants, representatives, and employees free and
harmless from and against any and all claims, liabilities, demands and causes of
action of every kind and character (including the amounts of judgments,
penalties, interest, court costs and legal fees incurred by the indemnified
Party in defense of same) on account of the ownership, operation or maintenance
of the Facilities or other matters contemplated by this Lease Agreement, except
to the extent the same arise from WYCO’s negligence or willful
misconduct. WYCO agrees to protect, defend, indemnify and hold CIG
and CIG’s officers, directors, members, shareholders, agents, servants,
representatives, and employees free and harmless from and against any and all
claims, liabilities, demands and causes of action of every kind and character
(including the amounts of judgments, penalties, interest, court costs and legal
fees incurred by the indemnified Party in defense of same) on account of the
ownership, operation or maintenance of the Facilities or other matters
contemplated by this Lease Agreement but only to the extent the same arise from
WYCO’s negligence or willful misconduct. WYCO or CIG, however, shall
have the right, at their option, to participate at their own expense in the
defense of such suit without relieving CIG or WYCO of any obligation
hereunder.
ARTICLE
XI
DEFAULT
11.1 Default
Defined. Any one or more of the following events shall
constitute a Default under this Lease Agreement:
(a) CIG’s
failure to pay any Lease Payment or other monetary obligations owed under this
Lease Agreement when the same is due, unless such failure is cured within thirty
(30) days after WYCO gives notice thereof to CIG; or
(b) CIG's
failure to perform or observe any covenant of this Lease Agreement (other than a
default involving the payment of money), unless the default is cured within
ninety (90) days after WYCO gives notice thereof to CIG (provided that CIG must
promptly commence and at all times thereafter diligently prosecute such cure as
a condition hereof).
11.2 Remedies. Upon
the occurrence and continuance of a Default by CIG, WYCO may do one or more of
the following:
(a) Perform,
on behalf of and at the expense of CIG, any covenant or obligation of CIG under
this Lease Agreement that CIG has failed to perform and of which WYCO has given
CIG notice, the cost of which performance by WYCO shall be deemed an additional
lease payment payable by CIG to WYCO hereunder;
(b) Terminate
this Lease Agreement and the tenancy created hereby, and take possession of the
interest in the Facilities from CIG (in which event CIG will have no further
rights hereunder, including, without limitation, pursuant to Article 3 hereof);
and/or
(c) Exercise
any other legal or equitable right or remedy which it may have.
ARTICLE
XII
FORCE
MAJEURE
12.1 Force
Majeure Defined. As used herein, “Force Majeure” shall mean
any act or event that (a) renders it impossible
for the
affected Party to perform its
obligations under this Agreement; (b) is beyond the affected Party’s control and
is not the result of the fault or negligence of the affected Party; and (c)
could not have been
prevented or avoided by the affected Party through the exercise of due
diligence,
including but not limited to, the expenditure of reasonable amounts of
money considering the scope of the service being provided. Subject to
the satisfaction of the conditions set forth in the preceding provision, Force
Majeure shall include, without being limited to, the following acts or events:
acts of God, including fires, explosions, earthquakes or volcanic eruptions,
storms, floods, washouts and extreme cold or freezing weather; necessity for
compliance with any court order, law, regulation or ordinance promulgated by any
Governmental Instrumentality having jurisdiction, either federal, Indian,
state or local, civil or military, and that is not the result of the affected
Party’s noncompliance with its obligations; acts of a public enemy; wars and
civil disturbances; strikes, lockouts or other industrial disturbances that are
not due to the affected Party’s failure to comply with any labor
contract. It is understood and agreed that the settlement of strikes
or lockouts shall be entirely within the discretion of the Party having the
difficulty and that the above requirement that any Force Majeure shall be
remedied with all reasonable dispatch shall not require the settlement of
strikes or lockouts by acceding to the demands of an opposing party when such
course is inadvisable in the discretion of the Party having the
difficulty. Force Majeure shall not include any of the following
events: (A) economic difficulty, including the lack of financial resources; (B)
change in market economic conditions; and (C) failures by any of the contractors
of the affected Party to perform their respective obligations, except when such
event meets the requirements of Force Majeure as provided above. It
is further understood and agreed that risks of regulatory disallowance or other
economic penalties shall not constitute events of Force Majeure.
12.2 Effect
of Force Majeure. If by reason of Force Majeure either Party
is rendered unable, wholly or in part, to carry out its obligation under this
Agreement and if such Party gives notice and reasonably full particulars of such
Force Majeure in writing to the other within a reasonable time after the
occurrence of the cause relied on, the Party giving such notice, so far as and
to the extent that such Party is affected by such Force Majeure, shall not be
liable in damages during the continuance of any inability so caused; provided
such cause shall be remedied with all reasonable dispatch.
12.3 Limitations. Any
Force Majeure affecting the performance hereunder by either Party, however,
shall not relieve such Party of liability in the event of concurring negligence
or in the event of failure to use due diligence to remedy the situation and to
remove the cause in an adequate manner and with all reasonable dispatch, nor
shall such causes or contingencies affecting such performance relieve either
Party from its obligations to make payments as determined
hereunder.
ARTICLE
XIII
DISPUTE
RESOLUTION
13.1 Mediation
of Disputes and Disagreements. In the event of any dispute or
disagreement (a “Dispute”) arising out of or relating to the implementation or
performance of this Lease Agreement, the Parties shall make all reasonable
efforts to resolve such Dispute by negotiation between representatives of the
senior management of each Party. At any time during the negotiation
of any Dispute, either Party shall have the right, upon written notice to the
other, to submit such Dispute to mediation by a project mediator (the “Project
Mediator”) jointly appointed by the Parties. In the event, the
Parties are unable to appoint a mutually agreeable Project Mediator within ten
(10) Days of submission of the Dispute to mediation, either Party may request
that the Project Mediator shall be appointed by the Chair of the American
Arbitration Association. If the Dispute has not been resolved within
thirty (30) Days after the appointment of the Project Mediator, either Party
may, upon written notice to the other, withdraw from the mediation process and
the terms of Section 13.2 shall apply.
13.2 Binding
Arbitration. Subject to Section 13.1, the Parties may submit
any Dispute to final binding arbitration under the American Arbitration
Association Rules by three (3) arbitrators. Each Party shall appoint
one arbitrator and the third arbitrator, if it cannot be appointed by the
agreement of the party arbitrators, shall be appointed by the American
Arbitration Association governing body. Each Party hereby irrevocably
waives the right to submit any Dispute, or to appeal any arbitration award, to
any court. The seat of the arbitration shall be in Denver, Colorado
or in Colorado Springs, Colorado, at the option of the Party initiating the
arbitration. The language of the arbitration shall be English. Any
award rendered by an arbitration tribunal shall be final and binding on the
Parties and any court having jurisdiction may enforce such
award. Where Disputes arise that are so closely connected that it is
expedient for them to be resolved in the same proceedings, the arbitrators shall
have the power to order that the proceedings to resolve that Dispute shall be
consolidated with those to resolve the other Dispute(s) (whether or not
proceedings to resolve the other Dispute(s) have yet been instituted), provided
that no date for exchange of witness statements has been fixed.
13.3 General
Principles. During the negotiation, mediation, or arbitration
of any Dispute, CIG shall continue to perform its obligations in accordance with
the terms and conditions of this Lease Agreement.
ARTICLE
XIV
MISCELLANEOUS
14.1 Assignment. Neither
Party hereto shall assign this Lease Agreement or any of its rights or
obligations hereunder without the written consent of the other Party, except
that the Lease Agreement may be assigned (a) by WYCO, to any entity acquiring
title to the Facilities, and (b) by CIG, to any entity succeeding to CIG’s
operation of CIG’s entire gas pipeline facilities, including, without
limitation, the Facilities. WYCO shall have the right to encumber the
Facilities with debt financing and in connection therewith to grant a mortgage
or other security interest in the Facilities and this Lease Agreement shall at
all times be subject and subordinate to such mortgage or other security
interest. The foregoing subordination shall be subordinate and
automatic, however, CIG agrees to confirm the same in writing upon the request
of WYCO.
14.2 Notices. Any
notice, request, demand or statement required or permitted to be given under
this Lease Agreement must be in writing and addressed as follows:
If to WYCO: | WYCO Development LLC | ||
X.X. Xxx 0000 | |||
Xxxxxxxx Xxxxxxx, XX 00000.0000 | |||
Attention: Chairman of the Management Committee | |||
If to CIG: | Colorado Interstate Gas Company | ||
X.X. Xxx 0000 | |||
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000 | |||
Attention: Marketing |
Either Party may
from time to time designate any other address by formal written notice to the
other Party.
14.3 Additional
Documents. Upon reasonable request, both Parties hereto shall
execute and deliver, or cause to be executed and delivered any additional
documents required to effectuate the purposes of this Lease
Agreement.
14.4 Applicable
Law. This Lease Agreement will be governed by, and construed
in accordance with, the laws of the State of Colorado.
14.5 Regulation. This
Lease Agreement and the respective obligations of the Parties hereto are subject
to the present and future valid laws, orders, rules and regulations of duly
constituted authorities having jurisdiction.
14.6 Amendments
and Modifications. This Lease Agreement may not be amended or
modified except by a writing signed by WYCO and CIG.
14.7 Severability. Any
provision of this Lease Agreement prohibited by or rendered unenforceable under
any applicable laws, codes, or regulations promulgated by any regulatory
authority having jurisdiction over the Facilities , shall, at sole option of the
WYCO, not affect the remaining portions of this Lease Agreement, which shall
remain enforceable to the fullest extent permitted by law.
14.8 Section
Headings. Section headings are inserted for convenience only
and shall not be construed as part of this Lease Agreement.
14.9 Counterparts
Execution. This
Lease Agreement may be executed in two or more counterparts each of which shall
constitute a single agreement.
IN
WITNESS WHEREOF, the Parties hereto have executed this Lease Agreement as
of the dates shown below, with the intention of causing the Lease Agreement to
be effective as of the date first written
above.
WYCO
DEVELOPMENT LLC
Acting
by and through its Members
WYCO
HOLDING COMPANY, L.L.C.
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By:
|
/s/ Xxxxxx X. Xxxxx | ||
Xxxxxx X.
Xxxxx
|
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Vice
President
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Dated:
December 17, 2008
|
XCEL
ENERGY WYCO INC.
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By:
|
/s/ Xxxxxx X. Xxxxx XX | ||
Xxxxxx X. Xxxxx XX | |||
Vice
President
|
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Dated:
December 15, 0000
|
XXXXXXXX
XXXXXXXXXX GAS COMPANY
|
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By:
|
/s/ Xxxxxx X. Xxxxx | ||
Xxxxxx X.
Xxxxx
|
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Vice
President
|
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Dated:
December 17, 2008
|